TSP's F Fund Spikes Amid Market Turbulence
August 24, 2015
With much of the market in free fall, the Thrift Savings Plan's Fixed Income (F) Fund is performing particularly well, according to TSP's governing agency.
Perceived weaknesses in China precipitated a massive tumble in American and international markets in recent days, with the Dow Jones Industrial average dropping more than 1,000 points Monday morning. The declines have caused most of the funds available in federal employees' retirement investment portfolios to fall so far in August.
The F Fund, which tracks the U.S. bond market, is the exception to that trend, however. The offering is up "sharply" in August, officials said at a Federal Retirement Thrift Investment Board meeting on Monday. The F Fund is one of TSP's more stable investments available to participants. It is up 0.79 percent on the year, the least of any of TSP's individual funds.
Unfortunately, relatively few feds will benefit -- less than 5 percent of federal employees are invested in the F Fund. In July, TSP participants collectively transferred $337 million out of the F Fund.
Withdrawals from TSP have spiked in recent weeks, which FTRIB said is typical around this time of year due to vacations and tuition payments.
Despite the negative short-term developments, the board was satisfied with the growing overall participation rate -- now at 88.6 percent of the civilian Federal Employees Retirement System workforce -- and the growth in allocation to lifecycle (L) funds. The number of L Fund participants recently eclipsed 1 million, and that number will likely grow significantly in the coming months as it becomes the default offering.
Of long-term concern to FRTIB was a small drop off from 2013 to 2014 in the rate of TSP participants receiving a full match from their agencies. Feds must place at least 5 percent of their paychecks in their retirement accounts to receive the full 4 percent government contribution. FRTIB set the target of 80 percent of employees contributing at least 5 percent, but the rate dropped to 74.4 by the end of 2014.
New federal workers default to contributing 3 percent of their paychecks to their TSP accounts, which results in employees leaving up to 1 percent of an agency match on the table. Gregory Long, FRTIB's executive director, expressed concern on Monday that the policy is tacitly encouraging participants not to receive the full match. He promised to review it in the coming months.
CORRECTION: This story has been updated to clarify the default government match.
(Image via bikeriderlondon/Shutterstock.com)
August 24, 2015
TSP's F Fund Spikes Amid Market Turbulence
Posted by: sarah_oz@yahoo.com
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